As per various newspapers, Bain Capital is picking up close to 31% stake in Lilliput Kidswear for $60 mn or Rs. 265 crore. Everstone Capital and the promoter of Lilliput, Sanjeev Narula would be selling a part of their shareholding to Bain Capital.
Based on my findings, Bain Capital has paid on the higher side (approx. 30% premium) to acquire the stake in Lilliput Kidswear. Using parameters like sales multiple and earnings multiple Lilliput Kidswear should’ve been valued at anything between Rs. 625-650 crore and not Rs. 850 crore.
The closest competitor to Lilliput Kidswear is Gini & Jony Ltd. The latter is backed by Reliance ADAG Group, and Arisaig India. It is currently mulling an IPO and is seeking a valuation of over Rs 500 crore.
Company Name: Lilliput Kidswear Ltd.
Incorporated: 1991
Production Capacity: 12 million units per annum
Retail Outlets: 250
Turnover: Rs. 350-400 crore
CEO/CMD: Sanjeev Narula
Other Investors: Everstone Capital (Future Group) invested in 2006
The Indian kidswear market is growing rapidly; in the range of 25-40% per annum. However, it is marred by poor profit margins – Ebitda Margins of 12-15% and Net Margins of 5-8%.
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